As 2024 comes to a close, IT leaders are grappling with how to allocate year-end budgets effectively. This year brought transformative changes to software licensing, with major headlines from vendors like Oracle, VMware, and Microsoft dominating the landscape. Navigating these developments requires proactive planning and an eye toward the future. In this blog we will cover how investing in ITAM will set you up for success in 2025 and beyond.
Reflections on 2024’s Software Licensing Headlines
This year was marked by major shifts in licensing strategies from top vendors:
- Oracle’s Java Licensing Update: As of October 15, 2024, Oracle JDK 17 updates transitioned from the No-Fee Terms and Conditions (NFTC) license to the Oracle Technology Network (OTN) License Agreement for Java SE. This shift imposes stricter terms, affecting organizations relying on Oracle JDK 17. For detailed information, refer to Oracle’s announcement.
- VMware’s Licensing Transition Post-Broadcom Acquisition: Following Broadcom’s acquisition, VMware announced the end of availability for perpetual licensing, moving to subscription-based models for products like VMware Cloud Foundation and VMware vSphere Foundation. This change aims to streamline offerings but requires customers to adapt to new licensing structures. Details are available on VMware’s blog.
- Microsoft’s AI Licensing for Microsoft 365 Copilot: Microsoft expanded the availability of its AI-powered Copilot features across Microsoft 365 applications, integrating advanced AI capabilities into tools like Word, Excel, and Outlook. This integration introduces new licensing considerations for organizations adopting these features. More information can be found on Microsoft’s official blog.
These changes underscore the importance of strategic Software Asset Management (SAM) to mitigate compliance risks and optimize budgets.
Revisiting the Lessons from 2023
Last year, we explored how strategic SAM investments could yield significant returns. In 2023, companies that conducted Compliance and Optimization Reviews (COR) with LicenseFortress saw an average ROI of 6,300%, saving millions by addressing compliance issues and uncovering optimization opportunities. These lessons remain highly relevant as organizations face even more complex licensing challenges in 2024.
You can revisit the original blog for a detailed breakdown of the ROI calculation and insights into why SAM remains a critical investment. Read last year’s blog: A Business Case for Spending Your Year-End Budget.
The Case for SAM at Year-End
Our recent survey on the state of software licensing, scheduled for release in January, highlights the growing challenges organizations face in managing compliance. One of the most striking findings was the sharp increase in the frequency of software audits. 62% of respondents reported being audited within the past year—up from 40% in 2023—with larger organizations disproportionately affected. Nearly two-thirds of enterprises with more than 5,000 employees faced audits in 2024.
This rise in audits mirrors significant licensing changes from major vendors. Oracle’s shift to an employee-based licensing model for Java introduced higher costs and compliance hurdles. VMware’s transition to subscription-based licensing under Broadcom disrupted long-standing perpetual models. Meanwhile, Microsoft’s AI-powered tools, including Microsoft 365 Copilot, brought additional costs and complexities that required organizations to adapt their strategies.
These findings, part of our upcoming 2025 Software Licensing Survey, provide actionable insights into the latest trends, audit risks, and strategies for navigating today’s increasingly complex licensing environment. The full report, set for release in January, will equip organizations with the tools and knowledge they need to stay ahead of these challenges.
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Looking Ahead: Trends for 2025
As we approach 2025, the software licensing landscape will continue to evolve. AI-driven pricing models and hybrid cloud environments are expected to introduce new challenges, while vendors show no signs of slowing their aggressive audit tactics. Organizations must stay informed and proactive to maintain control and avoid unexpected costs.
Actionable Steps to Optimize Your Licensing Strategy
With so many transformative changes in the licensing landscape, IT leaders can take the following steps to ensure compliance and cost savings:
- Conduct a Compliance and Optimization Review (COR):
Assess your software usage and entitlements to identify compliance gaps and opportunities to reduce costs. A thorough COR ensures your organization is audit-ready and can address unnecessary spending before year-end. - Review Vendor-Specific Changes:
Dive deep into how changes from Oracle, VMware, and Microsoft impact your organization. Whether it’s Oracle’s employee-based Java licensing, VMware’s subscription model, or Microsoft’s AI-driven features, understanding these shifts is essential for strategic planning. - Optimize IT Asset Management (ITAM):
Use ITAM to monitor your software assets, track usage, and eliminate redundancies. This proactive approach not only ensures compliance but also positions your organization for financial optimization. - Prepare for Potential Audits:
With audit frequency increasing, establish internal protocols to manage audits efficiently. Review vendor contracts, locate software installations, and create a mitigation plan. - Engage with Licensing Experts:
Partnering with experts can simplify complex negotiations, provide tailored compliance solutions, and uncover cost-saving opportunities. - Allocate Your Year-End Budget Wisely:
Invest in areas like ITAM and compliance services that provide measurable returns. Proactive spending now can prevent costly surprises in the year ahead.
Conclusion
The lessons from 2023 and the realities of 2024 make one thing clear: proactive software management is essential. Investing in SAM today ensures compliance, optimizes costs, and positions organizations to thrive in an increasingly complex licensing environment.
Schedule a consultation to explore how our solutions can help you close 2024 on a strong note and prepare for success in 2025.
